Here’s how you can leave a philanthropic legacy to benefit an organization you care about.
A charitable bequest is a note in your will that designates part of your estate — money or property — to go to charity after your death. It’s a way to continue supporting a favorite charity even after you’re gone, as well as to leave a legacy of philanthropy. Whether you have a large estate or a small one, here’s how you can make a charitable bequest to benefit an organization you care about — and why you should.
Choose an organization to receive your bequest
Before you can plan your bequest you’ll want to have an organization in mind. There are many organizations that can benefit from your generosity at the end of your life, and they’re not necessarily the ones you think of first when you think of “charity.”
Certainly, traditional charities are excellent choices to which to make a charitable bequest. If you support or admire an organization or foundation that does good work for children or animals, research into diseases, or any other cause you care about, you can make a charitable bequest to that organization and it will surely be appreciated.
Other options include:
• Colleges and universities
• Elementary and secondary schools
• Churches and other places of worship
• Historical societies
Anywhere you might have given a donation during your life is a good candidate for a charitable bequest.
Decide what type of bequest you will give
There are several different ways to set up a charitable bequest. First and most common is a specific bequest, in which you designate an amount of money or a specific item (such as a car or an art collection) to go to the charity of your choice.
There are a couple of risks in choosing a specific bequest. Specific bequests will generally be taken out of the estate before other bequests. If your specific bequest to a charity is large and your estate is smaller than you expected by the time you die, it may be that other beneficiaries lose out after the specific bequest is distributed to the charity — because there wasn’t enough left to go around. It may even be that the amount of money or item you chose for your specific bequest is no longer available in your estate by the time you die.
One way to avoid those risks is to make a percentage bequest. This is when you designate a percentage of your estate to go to the charity of your choice. This eliminates the possibility of a specific bequest cleaning out most of your estate if it has shrunk over the years. And if the opposite has happened – your estate has grown due to good investments – it can provide an even more generous gift to the charity you support.
Another option is a residuary bequest. This flips the order that places specific bequests ahead of other bequests. Instead, the charitable bequest will be made only after your other debts and expenses are paid and bequests are made. That means there may or may not be funds left to go to the charity.
You can choose to make a contingent bequest, which only allows for the bequest to go to the charity if your named beneficiaries have died before you, or if they waive their right to inherit from you. This would ensure that your family won’t miss out on their inheritance if they’re around to receive it, but the charity is next in line in case they are no longer living when you die.
Decide what you will give in your bequest
Should your bequest consist of money or items or both? That’s your call. If you have a collection that could be of value to a museum or historical society, it makes sense to designate it as a bequest. A car is a common item to donate to charity, and many charities know what to do to make that a useful gift. If you have a historic home, you might leave it to a local preservation society.
But not all property is going to make a good charitable bequest. If it’s something that the charity may not know what to do with, or that may create a lot of work for them in order to make a small amount of money, it’s probably not a good choice. The best way to know if your gift will be useful to the charity is to ask. Let them know what you’re thinking of leaving them in your will, and they can tell you if it will be useful or not.
If you’re unsure about any of your property, but you still want to support an organization with a charitable bequest, the best choice is a monetary bequest.
Add the bequest to your will and tell people about it
As good as your intentions may be, your bequest won’t be carried out if you don’t put it in your will. So once you know who you want to give to, what type of bequest you’ll make and what you want to give, get those details out of your head and on paper. Write it into your will — or have a lawyer help you do it — and make sure to sign the final version (and have it notarized, if that’s required in your state).
Then make sure your family understands your plan. Tell them about your charitable bequest and store your will in a place they know about and can access easily. Even if it’s signed and notarized, your will can’t be enforced if it’s hidden away so well that no one can find it.
Talk to the charity that will benefit from your generosity, too. Especially if you’re leaving them property rather than cash, they will want to be able to make a plan for how they’ll use that property. But they may want to plan for a cash gift, too, so share your intentions with them. Perhaps you’ll even work together to plan a scholarship or endowment that your bequest will fund.
Pat yourself on the back while you think about the benefits of making a charitable bequest
Once your bequest is planned and in writing, everything is in place for it to be carried out after your death. Congratulations! You’ve done a good deed, and the charity that benefits will surely be grateful. But that’s not the only benefit to making a charitable bequest. Here are some other reasons to do it:
There are tax benefits involved with setting aside money from your estate for a charitable bequest. These benefits change as tax laws change, and currently only larger estates will benefit from making a charitable bequest. However, these laws may change before your death, and it may be that they’ll offer more tax benefits to your bequest if they do.
Expert handling of your assets
If you are donating something like an art collection to a museum upon your death, you can feel confident that these professionals will know what to do with your precious collection. The same goes if you donate a historic home to a preservation society and so on. Your assets will be handled right and they’ll be in a position to be appreciated by many.
A legacy of generosity
When you make a charitable bequest, you’re doing something that will be remembered when people look back on your life. This is a powerful benefit to leaving part of your estate to charity. Whether you have a building named after you or just fund a small improvement to the organization, you’ll create a positive legacy for yourself with your bequest.
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